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#1 of 4024 Do You Favor A Government Loan To The Detroit 3?
Sep 09, 2008 (5:41 pm)
This is a timely topic.
The details will be worked out IF the proposal moves forward, but the talk is of a loan, with interest, to be repaid, not a bail out in the form of a conservatorship, a la Fannie Mae and Freddie Mac. Unlike with the giant mortgage institutions, the U.S. government will not take an ownership stake in the domestic auto companies, but lend them money, perhaps $50 billion, at favorable interest rates.
This discussion provides an opportunity to share your thoughts on this important matter.
#2 of 4024 Re: Do You Favor A Government Loan To The Detroit 3? [hpmctorque]
Sep 09, 2008 (6:17 pm)
No. "Give me money or I'll burn your house down" isn't a loan.
Sep 09, 2008 (7:49 pm)
this won't be a repeat of Chrysler in the 80s. They will suck down the money and STILL go under in five years, or maybe ten in the case of Ford.
Now GM maybe has a viable business plan for their long-term future, so maybe they can have a taxpayer loan. But there is a lot more pain in their future too, so I'm not 100% ready to give them the money either.
Of course, in a market where the government feels duty bound to blow taxpayer money all over the place, taking over Freddie and Fannie, and before that fixing the Bear Stearns mess, I don't see why the automakers should be that different. On that basis, they should be given the money rather than loaned it. But I think the Freddie, Fannie, and Bear Stearns things were all misguided and I don't support it.
Can you imagine if the government took over GM and ran it as the national car company of the U.S.?
#4 of 4024 Bad idea.
Sep 09, 2008 (8:49 pm)
The Big 3 have no plan. It will cost us billions just to insure the loans due to the shaky nature of the companies. Let em go broke. Or just move their operations all to Canada and Mexico. They can shut down here and keep their money making businesses in the EU and China. That is the emerging market. Maybe China or the Saudis would like to bail them out. We already own too many homes we cannot sell. We don't need millions of cars and trucks rusting on the lots.
#5 of 4024 Why not...
Sep 10, 2008 (1:06 am)
loan them the $$$$. Hell, we "GIVE" billions to foreign countries at the drop of a hat....NOT LOAN IT...."GIVE" it away. The least we can do is MAKE THE LOAN AND LET THEM TRY TO SURVIVE.
I read the interest rate would probably be 5% or 6% as compared to a much higher rate if they could borrow elsewher (as their credit rateing is probably down the tank). There are hundreds of thousands of jobs at stake with the trickle down affect if they went under. Suppliers, truckers, small businesses.(God only knows how many businesses and people it would affect.
It is my understanding that some of the foreign countries susidize their auto manufacturers. (I don't know for certain...but have read such).
What the hell do we have to lose. It's only money that the govt. prints on a daily basis. I certainly believ GM and Ford are certainly TRYING to make things profitable again. (Chrysler I don't really know, since it went private).
#6 of 4024 Re: Do You Favor A Government Loan To The Detroit 3? [hpmctorque]
Sep 10, 2008 (6:27 am)
We seem to be writing a lot of checks these days.
#7 of 4024 Re: Why not... [nortsr1]
Sep 10, 2008 (6:42 am)
Yeah, but they have been TRYING to make things profitable for a long time, with no success. And in at least 2 cases out of 3, I don't believe they even understand what it takes to be successful in the auto industry in 2008. Or have any clue as to what consumers want, and how to make profitable product for the foreseeable future (say, 20 years out).
GM is the exception, although I am as I said before unconvinced they can make it out of the immense hole they have dug, even with lots of financial help.
As for the trickle down problem, 3/4 of the domestic suppliers are at bankruptcy's door as a result of the "Big 3" meltdown already. We will lose many, including some of the biggest ones, regardless of whether or not we bail out the automakers.
#8 of 4024 I have mixed feelings......
Sep 10, 2008 (10:15 am)
I would like to see some of the Big Three survive (let's face it, ChryCo is a goner) but IMO there would have to be certain conditions,
-The taxpayers would have first claim on any assets in case of material default or insolvency.
-Executive officer salaries must be limited to the highest grade Federal GS Salaries (George Will's idea).
-Production of products intended for sale in North America must be limited to NAFTA signatories and for every vehicle imported from Canada or Mexico there must be a corresponding export of US made units to other countries.
#9 of 4024 Re: Why not... [nippononly]
by Kirstie@Edmunds HOST
Sep 10, 2008 (10:37 am)
I would not favor a loan prior to a plan, from each of the big 3, that shows a reasonable likelihood of resulting in return to profitability in a reasonable timespan. I waver on this, because collapse would be horrible for the economy, but a short-term solution would only prolong the years til collapse, not eliminate the likelihood of collapse.
And who's to say that the economy would be in a BETTER position to handle it at that time?
#10 of 4024 Re: Why not... [kirstie_h]
Sep 10, 2008 (11:15 am)
I would need more than a plan to profitability. Ford has one that see them profitable by 2009 and that is not going to happen. And Chrysler (can we call them Nissan yet) doesn't have prayer. What happens if they get the loan and still go bankrupt? Does the government take over control of GM or Ford?
Considering we are a capitalistic and free market society, i have a hard time agreeing to bail out a company that is in trouble because of their own poor management and lack of vision. At some point someone has to make the hard decision to let one of these giants fall.